The extension of the payroll tax cut was approved by congress in late 2011. To fund this extension they tapped Fannie Mae and Freddie Mac to foot the bill. In the next couple of months, Fannie and Freddie will be adding a premium to the rate on every loan they insure to pay for this temporary extension.

Costs for $100,000 loan equals approx. $500.

Costs for $200,000 loan equals approx. $1000.

If you or someone you know is planning to get a new home mortgage, you may want to consider acting on the opportunity before the additional expenses are applied.

If you are in the process of getting a new loan and your payment is currently locked in you can avoid the increase if your loan is closed before mid-February.

If you have already closed on a new low interest rate in the past 24 mos and have no need for additional financing right now you will not need to worry about this fee.

Call my office if you have questions and schedule time to discuss the best options.

Investing your personal savings wisely is simple, but it’s not easy. As investors, we act irrationally. We know what we’re supposed to do. We sell when the market is high and jump back in when it’s low. However, the evidence shows that even intelligent investors do the exact opposite. Why?!

Because our behavior is tied—more than anything else—to pleasure and pain.

Imagine a campfire. It brings warmth and pleasure as you get closer to it. But get too close and it will bring pain. As we seek the pleasure of an inviting campfire, our instincts protect us from the pain of getting too close.

Seeking pleasure and avoiding pain are hardwired to our behavior. This serves us well with fire, but not with investing our savings. Investors experience real pain when they see the value of their savings drop, and with the pain comes a strong desire—an instinct!—to get out.

Equally dangerous is the pleasure of seeing the growth in the market. Once they’ve gotten out, investors wait on the sidelines until things swing the other way. Then instinct tells them to jump back in. Sell low and buy high. As investors we know that’s exactly the opposite of what we should do, but the pain/pleasure instincts are strong.

They act against us.

But there’s an answer for our instincts…

Free Market Funds are built to combat the bad behaviors that destroy investor returns.

Coaching helps you identify the bad inclinations before you act on them.

Rebalancing is a disciplined approach to always selling high and buying low.

So enjoy the warmth of disciplined investing. Don’t get burned by bad behavior.

I get a lot of questions from folks wondering if the rates can go lower than they are now. Here is a very interesting chart that tracks the mortgage bonds for the past year. (Note: The bond chart moves opposite the interest rates: i.e. when the chart moves higher, interest rates generally move lower)

You can see from the chart that the mortgage bonds have stalled out at the same place they did last year. This is significant. We don’t know when the interest rates will jump up but it does not appear that they will go significantly lower from where they are today. If you know of anyone that is considering financing their home in the next few months they would do well to get things started soon to get the best terms.

Most fixed rates are between 3.5% and 4.5% depending on the length of the term (15yr to 30yrs) and the credit of the borrower. Let me know if you have questions about any of this.